Manchester City have made Mark Hughes their No1 choice to replace Sven-Goran Eriksson. The former Wales manager is said to be interested in a new challenge but he would prefer to join Chelsea.

The Blackburn Rovers manager's representatives have been waiting for the Champions League runners-up to make an approach but that has not yet happened - although they do plan to interview him - and City are now hoping to pounce.

There is strong support for Hughes at Chelsea from the chief executive, Peter Kenyon, but the owner, Roman Abramovich, is hoping to luring the Portugal head coach, Luiz Felipe Scolari, to Stamford Bridge post-Euro 2008. If Hughes moves this summer he is expected to take his No2, Mark Bowen, and the former Chelsea goalkeepers Eddie Niedzwiecki and Kevin Hitchcock with him.

Eriksson's departure, after only one season and with a £1m pay-off, is believed to be imminent, and Blackburn are unlikely to stand in Hughes's way. The Welshman remains much in demand but his club have no plans to renegotiate his contract.

Hughes, who is on holiday, signed a two-year deal extension with the Lancashire club last summer and it includes an extra 12-month rolling contract. Rovers would, therefore, receive two years' compensation should their manager depart now.

The futures of several City players are uncertain and whoever comes in as manager may start the season without several key players. The captain, Richard Dunne, has more than one offer on the table, with Portsmouth emerging as a favoured destination despite interest from Tottenham Hotspur, and the midfielder Stephen Ireland is a target of the Sunderland manager, Roy Keane. The futures of Micah Richards and Michael Johnson are also unclear.

City, however, are not the only club needing to appoint a manager. At Chelsea, Abramovich is understood to be considering the merits of three candidates after Milan claimed over the weekend that an approach for Carlo Ancelotti had been rebuffed. And, although he has yet to decide on his first choice, Scolari is emerging as the most likely primary target to succeed Avram Grant.

The Brazilian is understood to have spoken with City in London last month about the possibility of taking over at Eastlands on a £3.2m-a-year deal, once his contract with Portugal expires. Scolari, who is highly regarded within Abramovich's close circle of advisers, does not intend to finalise his future until after the Euro 2008 tournament, but he is keen to manage in the Premier League.

Factions within Stamford Bridge continue to push the credentials of their own preferred candidates, with support for Frank Rijkaard maintained by the chief scout, Frank Arnesen. Guus Hiddink, another candidate, has reiterated his intention to remain as Russia's manager for a further two years. "I have given my word to the Russian football president, and he to me, that we will continue until the end of the 2010 World Cup," said the Dutchman.

The Milan vice-president Adriano Galliani's claim that a move had been made for Ancelotti - a two-times Champions League winner with the Rossoneri - came as something of a surprise and Chelsea insist no official move has been made for the 48-year-old Italian.